Using Fractional Prefabrication to Solve the U.S. Housing Shortage; AGORUS Takes the Next Step in Their Journey
Blackhorn Ventures is thrilled to announce that AGORUS, an exceptional San Diego-based team working to streamline residential homebuilding through fractional prefabrication, recently emerged from stealth and announced their seed capital raise. We’re proud to invest alongside our friends at Toyota Ventures, Point72 Ventures, Signia Venture Partners, DivCoWest Ventures and Kennedy Wilson. AGORUS provides homeowners with a significantly quicker, more precise, less costly building experience by creating a fully-digitized model of each house, then using prefabricated panels to construct properties in a matter of days.
We’re proud to be partnered with the AGORUS team as they scale a new approach to offsite construction; a central pillar of our resource efficiency and industrial impact in the built environment thesis.
While every other industry has been revolutionized by efficiency gains from cutting-edge technology, construction has fallen far behind. 96% of construction data remains uncaptured, and it’s so expensive that the cost of labor has become the #1 problem for developers nationwide. Most importantly, it’s inefficient– not only has it failed to utilize new technology to streamline the construction process, but according to a report from The Economist, there has actually been a 50% drop in productivity since 1970. Even as the capabilities of our modern world have supercharged the efficiency of everything from finance to food, construction has been backsliding into expensive, analog, and inefficient territory.
As Garrett Moore, co-founder and CEO of AGORUS, puts it: “With a declining labor force and an increasing demand for homes, the construction industry is fighting a losing war on two fronts. It needs 21st century tools to fight both threats, but our nation continues to build homes onsite, by hand, the same way it has done for 120 years.”
It’s also important to note that previous attempts at prefabrication technology have failed to gain traction, and to understand why this is the case. For example, the US Government’s foray into prefabrication, dubbed “Operation Breakthrough”, was a spectacular failure. This turbulence in the prefabrication market has three main sources: the cyclical nature of the housing market’s economics, the high level of customization needed to accommodate differences from place to place, and the fragmented nature of the construction industry as it stands today. If these problems are not addressed, an attempt at prefabrication will struggle mightily to succeed.
AGORUS is building a vertically integrated automation system (VIAS) to design, manufacture, and assemble a home through one integrated software platform – starting with framing. Their software solution, called Talós, transforms an architect’s custom design into a detailed digital design file. The file breaks up the build into custom wall, floor and roofing panels which are created on a single automated, just-in-time manufacturing line. These panels are then transported to the jobsite and assembled by their 6-man field assembly and site technology team in days rather than taking weeks as does the traditional approach. Through off-site automation, the AGORUS solution minimizes waste, weather delays, neighborhood impact, labor cost, and onsite errors.
AGORUS embodies the Blackhorn thesis of fractional prefabrication as a solution to cyclicality, fragmentation, and customization. Their system offers customers a high degree of customization while facilitating seamless collaboration across developers, designers, engineers, and module fabricators. The integration between its software and automated production line reduces the cost of customization and enables just-in-time manufacturing for high asset utilization. They are prepared for the inevitable cyclicality of the construction market because AGORUS operates under a capital-light, high-margin, and low waste model through strategic partnerships with established panel fabricators and onsite assembly teams.
The Market Opportunity
While the construction industry comprises approximately 13 percent of global GDP, accounting for $11 trillion of annual value added, according to McKinsey, the modular and prefabricated construction market is predicted to be worth $200 billion by 2027.
More urgently, here in the US, a study by KKR on the post global financial crisis era asserts that “the U.S. housing market was undersupplied by roughly 3 million units. That supply-demand mismatch is now expressing itself in outsized home price and rent inflation. Demographics are aggravating the shortage, as millennials move into prime years for single-family housing demand.“ A report from Freddie Mac contends that the shortage is even more severe, at 3.8 million homes. AGORUS solves this problem by providing access to an affordable and scalable housing solution.
The Impact Opportunity
AGORUS has committed to carbon-neutral construction. Each home pulls 60 tons of CO2 from the atmosphere via sustainable timber harvesting and ensures zero waste from offsite material use. 8,000 pounds of lumber is typically wasted in the production of a 2000 square foot home, but AGORUS reduces lumber material by 15-20% through value engineering.
Additionally, with AGORUS in the market, the housing shortage currently plaguing the country can finally be addressed. With huge CPI inflation and an undersupply of millions of units of housing, an efficient and near-turnkey solution like AGORUS is capable of making a palpable difference in the affordable housing crisis.
AGORUS is led by Garrett Moore, the company’s founder and CEO. After completing an undergraduate degree at Stanford, Moore went on to a distinguished career as a Lieutenant Commander for the Navy SEALs. During his time with the SEALs, Moore received an Olmsted Scholarship (the military equivalent of a Fulbright scholarship) and completed his masters’ degree in cyber electronics from Tel Aviv University. With a background rich in strategy, leadership, and insights, Moore is poised to serve as a fantastic CEO for AGORUS as they continue to expand.
Moore is joined by Kyle Tompane, co-founder/CTO and fellow Navy SEAL, who brings extensive building and development experience to the company. Through personal experience building their own homes, Moore and Tompane noticed serious flaws in the residential homebuilding industry, prompting their decision to found AGORUS after their military careers.
We’re confident this team is well-suited to take AGORUS to the next level thanks to their well-composed mix of leadership and business experience. In the words of Moore, his passion for “competitive, integrated, highly dynamic teams” has never left him, and we believe he’s built just that at AGORUS.